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DonR3 (Louisiana)
Posts: 1
Posted:
I am a member of small Louisiana single family gated community which is covered by an HOA formed in early 2003. Our neighborhood grew quickly after inception, but was devastated by Hurricane Katrina in 2005. Since then we have had slow growth, and many of the original owners have sold out to other buyers. The original development company is still in control of the HOA. A formal HOA board of directors or acting committee has never been formed. The development company has lived up to it's duties, managing collection of dues, maintaining facilities, grass cutting, etc. However that is about all that is happening. There has been little to no visibility of funds usage, cost of operation, how architectural decisions are being made, enforced, etc. Out of 43 lots, we have about 17 homes, 2 in recent years, and 14 undeveloped lots, and 12 more still owned by the original builder. Of those who have homes built, we have all rebuilt from Katrina, have our neighborhood looking pretty good, and would like to see our little community move to the next level of living quality, with such things as decorating for holidays, beautification work around the neighborhood, social events, etc. Additionally, we would like to see better visibility to the budget, fund collection, expenses, rule enforcement, etc. In order to look into options, I sent notices out to all homeowners, and sponsored a gathering of the neighbors to discuss the issues. We had good attendance, including the developer also. Most of the attendee's agreed the next best steps were to move towards turnover of duties to the HOA. The builder is in support of this also. Questions:
1. Where do we get good info on how the turnover process is supposed to work? Especially to make it fair and equitable?
2. Is the turnover process best managed by a property attorney?
3. What is the norm for responsibility of dues for lots that a developer still owns, once turnover occurs? Our current CC&R doc exempts the "declarant" from paying dues for those lots, and we have concern if funds from dues will cover all expenses once turnover occurs.
4. We still have several lot owners which we have been unable to contact. Do we need to have confirmed notice to all lot owners, to hold and election?
5. Is it the norm to amend or revamp the CC&R doc as part of turnover? Or current document is focused very specifically on the “Declarant” perspective. Eventually we need the wording to be more focused on the HOA.
6. We currently do not have “ByLaws”. The only rules we have is the CC&R. Should we develop bylaws prior to turnover?

I could post more questions, but this is a lot. Let's see what the feedback brings..

Thanks in advance for your help..
TimB4 (Tennessee)
Posts: 21,059
Posted:
Quote:
Posted By DonR3 on 05/04/2011 6:01 PM

1. Where do we get good info on how the turnover process is supposed to work? Especially to make it fair and equitable?

Having not been through this myself, I can only offer the following links for information on the process:

Developer Turnover Checklist
Roadmap on Developer Transition (suggest printing then reading)
HOATalk Thread titled HOA Turnover
CHECKLIST FOLLOWING TURNOVER

NOTE: Check your State Statutes (HOA/Condo laws) as they might identify specific things that need to happen.

Quote:
Posted By DonR3 on 05/04/2011 6:01 PM

2. Is the turnover process best managed by a property attorney?

You will certainly need one. I would suggest that the Association pays for one that is not associated with the developer. However, many associations use the developers lawyer as it's sometimes cheaper.

Quote:
Posted By DonR3 on 05/04/2011 6:01 PM

3. What is the norm for responsibility of dues for lots that a developer still owns, once turnover occurs? Our current CC&R doc exempts the "declarant" from paying dues for those lots, and we have concern if funds from dues will cover all expenses once turnover occurs.

Turning over control of the Association is different from turning over the entire development. IF the governing documents give certain rights to the developer, until those documents are amended, they need to be followed.

Typically most governing documents favor the developer (as they are the people who wrote them). This may include not being required to pay assessments. Typically the developer also has more votes per lot then a homeowner which usually gives them enough votes to prevent changing the documents until they no longer own any lots.

Quote:
Posted By DonR3 on 05/04/2011 6:01 PM

4. We still have several lot owners which we have been unable to contact. Do we need to have confirmed notice to all lot owners, to hold and election?

You need to send notice to the addresses on file with the Association. However, if reaching a quorum is difficult, the Board may have to actually do a little more work like researching property records to try and locate a better mailing address for non-resident owners.

Quote:
Posted By DonR3 on 05/04/2011 6:01 PM

5. Is it the norm to amend or revamp the CC&R doc as part of turnover? Or current document is focused very specifically on the “Declarant” perspective. Eventually we need the wording to be more focused on the HOA.

As I mentioned earlier, it is typical that the developer has more votes per lot then a homeowner which usually gives them enough votes to prevent changing the documents until they no longer own any lots. Therefore, changing the documents usually take place after the developer no longer has the votes to prevent the changes.

Quote:
Posted By DonR3 on 05/04/2011 6:01 PM

6. We currently do not have “ByLaws”. The only rules we have is the CC&R. Should we develop bylaws prior to turnover?

If an association already exists then there would be bylaws. However, sometimes the homeowners create a new Association. Then the developers Association just transfers the property to the new Association.

NOTE: This does not change the CC&Rs as those documents are attached to the land and not to the Association (like the bylaws or Articles of incorporation).

I hope this helped. Hopefully those who have actually gone through all of this will chime in as well.

Tim
SusanW1 (Michigan)
Posts: 5,202
Posted:
Some HOAs have dues level that consider whether a lot is undeveloped or developed (home on it)

If you have to take care of roads, then the undeveloped lots are benefitting from this upkeep, and should have some kind of responsiblity to help out and to maintain those lots.

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